Overheard at SuperReturn Asia

Hear what experts had to say in Singapore about some of the hottest industry topics

On finding the right Asian investment opportunities

“Being a tourist LP in Asia is in some ways more difficult than being a GP. Imagine you are sitting at a poker table in Macau. The players are the management teams. The first ring around them is the GPs, who are looking to see who they will back. The LPs are the second ring deciding which GPs to back. LPs really need to engage, assess and track the players around the table – the management teams – that operate here in Asia, to get their perspectives and understand their objectives and evolution as opposed to just trying to evaluate the first ring (the GPs). That takes time, but it’s critical, in part because control positions are not commonplace in the region.”

Yup Kim, Head of Investments, CalPERS Private Equity

On shifting private debt dynamics in the US

“We’ve seen huge growth in the US private direct lending space and higher levels of borrowing going into this cycle even than just before the global financial crisis on the corporate side, so there will be challenges. The issue for private direct lending firms is that they haven’t been through this before and they are set up largely to originate rather than undertake work-outs and restructurings. There will therefore be an opportunity for more flexible capital to step in and provide liquidity. New entrants will have a particularly strong story to tell because they have fresh balance sheets and few, if any, legacy positions and they won’t have the overhang of tensions with sponsors in non-performing and underperforming situations.”

Adam Gubner, Managing Director & Portfolio Manager, PIMCO

On secondaries in Asia

“Asia has somewhat lagged my expectations of secondaries market growth over the past 10 years or so. That is partly because of the risk premium many buyers attach to secondaries deals in the region. There is clearly some irony currently for buyers in developed markets pointing to currency or geopolitical risks in Asia, but that does still factor into people’s thinking about Asia. This is changing, however. The GP-led segment has significant potential to accelerate and if you have local relationships and are backing the best managers, there is definitely value to be found in this part of the world.”

Pinal Nicum, Partner, Adams Street Partners

On co-investing in Asian markets

“Co-investing in Asia is much more hands-on than in Western markets. You have to excel in both country and sector knowledge to be successful here. You have to go from zero to 70 on country knowledge when doing these deals and there is a faster metabolism required to get up to speed with underwriting these risks. The underwriting quality between GPs in Asia is also quite broad – unlike in the US, you don’t have four GPs competing in an auction all eking out similar returns.”

Yup Kim, Head of Investments, CalPERS Private Equity

“One red flag in today’s market is when GPs want to be opportunistic and take advantage of the dislocations they see in the market. That’s all well and good because there are some tremendous dislocation opportunities out there, but if it is too far outside the lane of what has historically driven that GP’s success, that is a problem. As an LP, we have to ask how well the opportunity rhymes with a GP’s past deals. There has to be consistency.”

Mike Barzyk, Managing Director and Global Head of Private Equity at Allstate Investments